To Make a Killing on Wall Street, Start Meditating

Forget peace, love and understanding. Like the samurai before them, today's top traders are meditating to make a killing. Photo Illustration: Jamie Chung; Philippe Halsman/Magnum Photos

May 28 (Bloomberg) -- When stock and bond markets took a
dive in late January, hedge-fund manager David Ford kept his
cool.

Ford watched emerging markets melt down and read warnings
that the U.S. economy could crater too. As prices dropped, he
overcame the impulse to flee with the rest of the herd and,
instead, bought more corporate bonds, Bloomberg Pursuits will
report in its Summer 2014 issue.

After two decades as a trader, Ford credits his serenity to
experience -- and to the 20 minutes he spends in his pajamas
each morning repeating a meaningless mantra bestowed on him by a
teacher of Transcendental Meditation two years ago.

“I react to volatile markets much more calmly now,” Ford,
48, says. “I have more patience.”

He also has more money. Latigo Partners LP, his event-driven credit fund, climbed 24 percent last year. He almost beat
the surging stock market with a bond fund. Ford is part of a
growing number of Wall Street traders, including A-list hedge-fund managers Ray Dalio, Paul Tudor Jones and Michael Novogratz,
who are fine-tuning their brains -- and upping their games --
with meditation. Billionaire investor Daniel Loeb, who once
likened a chief executive officer to a drug addict during one of
his frequent public rants, in February praised meditation while
sharing a stage with the Dalai Lama in Washington, D.C.

The idea that Type-A traders are seeking profit with the
same tool that Buddhist monks use to achieve enlightenment might
seem like sacrilege. Yet most people misunderstand meditation,
says Jay Michaelson, author of “Evolving Dharma: Meditation,
Buddhism, and the Next Generation of Enlightenment.”

Samurai Practice

“Meditation used to have this reputation as a hippie thing
for people who speak in a particularly soft tone of voice,”
Michaelson says. Not so. “Samurai practiced meditation to
become more effective killers,” he says. So too did kamikaze
pilots. “It’s value neutral,” Michaelson says.

Workers at Goldman Sachs Group Inc. are folding into the
lotus position in droves, says Elizabeth Sudler, an instructor
the firm retains. Classes where students breathe and monitor
their wandering minds have waiting lists several hundred long,
Goldman spokesman David Wells says. One trader there gets a
twinge in his gut when he senses a move in the markets, Sudler
says. Meditating gives him an edge, he told her, by tuning into
that sensation more reliably. Others report downshifting more
easily after work and sleeping better at night.

“Goldman employees are under a lot of pressure to
produce,” Sudler says. “No one wants to be left behind.”

Anxiety, Psoriasis

Meditation is going mainstream in part because science is
substantiating what heretofore had been taken on faith. Up until
1983, only three peer-reviewed studies on meditation had ever
been published, Michaelson says. By last year, there were more
than 1,300 studies showing an almost absurd number of benefits,
from alleviating anxiety, depression and insomnia to reducing
heart disease and speeding recovery from psoriasis.

A 2005 study published by Harvard Medical School
neuroscientist Sara Lazar showed that meditating enhances the
prefrontal cortex, likely creating more connections between
neurons and enlarging blood vessels. Among other functions, the
prefrontal cortex processes sensory information, handles
rational decisions and regulates the amygdala, the structure
that feeds our fight-or-flight instinct. A tame amygdala may be
why David Ford bought bonds amid the panic -- a prescient move
as markets rebounded.

‘Brain Hacking’

Michaelson calls meditation “brain hacking,” because it
exploits the elastic nature of our gray matter, altering its
makeup, as Lazar and other scientists have proved. As such, it
may be the ultimate disruptive technology, he says. That kind of
talk gets the attention of traders, says Jeff Walker, former
head of JPMorgan Chase & Co.’s private-equity unit and a
longtime meditator.

“These guys are saying, ‘There’s an edge here that I
need,’” Walker says.

Humans have been meditating in some form for millennia.
Hindu texts from 1500 BC describe the practice, which hit the
big time when a Hindu prince named Siddhartha Gautama became
disenchanted with the empty opulence of the day and took up
residence beneath a fig tree to contemplate the causes of human
suffering. (Hint: Desire is a key culprit.) Through the
teachings of Siddhartha -- who sat down a prince and, after 49
days, arose the Buddha -- mindful meditation radiated out into
the world.

Inhaling, Exhaling

There are many forms of meditation. Vipassana, for example,
starts with concentrating on one thing, such as the breath. If a
dog barks, you might register it before quickly refocusing on
inhaling and exhaling. Mental intrusions are treated the same
way: Thoughts such as “book NetJets” or “offload bitcoins”
quickly pass like leaves floating on a stream.

Jon Kabat-Zinn, founding executive director of the Center
for Mindfulness in Medicine, Health Care and Society at the
University of Massachusetts Medical School, defines mindfulness
as “paying attention in a particular way, on purpose, in the
present moment and nonjudgmentally.” The aim is to become more
aware of the present and avoid getting hijacked by the past or
the future. Central to Buddhism are the unsettling notions that
everything we know is impermanent and that all we have is the
here and now.

Transcendental Meditation uses a mantra -- the repetition
of a single sound -- to settle the mind into its least-excited
state. The TM folks, through the years, have consistently
asserted their superiority over other disciplines.

Wellness Benefits

The website of the nonprofit Maharishi Foundation USA, for
example, has variously claimed that “only TM has been found in
hundreds of studies to produce immediate and long-term wellness
benefits of mind and body” and that “no other program for
personal development has received this level of attention and
respect from the scientific community.”

Transcendental Meditation was developed by Maharishi Mahesh
Yogi (née Mahesh Prasad Varma). Born near Jabalpur, India,
around 1918, the Maharishi, or Great Seer, started teaching his
method in 1955 and became a guru to the Beatles, who famously
traveled to Rishikesh, India, in 1968 to study with him.

Despite Transcendental Meditation’s claims of superiority,
John Denninger, director of research at the Benson-Henry
Institute for Mind Body Medicine at Massachusetts General
Hospital in Boston, isn’t so sure.

“I’m not convinced that any difference in outcome is big
enough to say you need to do one type of meditation over
another,” Denninger says. “Getting people to do it in the
first place is what matters.”

Perceptive Monks

Some of the most-striking research has come from the
University of California at Davis. Clifford Saron, a
neuroscientist there who speaks with the slow, gentle tone of a
holy man, went to the foothills of the Himalayas in the 1990s to
study Buddhist monks. Their serene focus inspired him to
organize the Shamatha Project. With his friend and former monk
B. Alan Wallace, Saron selected 60 people and tested their
attention and cognition. Thirty of them then attended a
meditation retreat in Colorado. (The other 30 went later.)

After three months, Saron re-examined the initial group and
discovered any number of striking changes. For one, the
meditators were literally more perceptive: They could discern
smaller differences between long and short lines flashed on a
screen.

“How much does an infant learn when it is alert and
relaxed?” Saron asks rhetorically. “That works for us, as
well.”

Lower Cortisol

Some of Saron’s subjects also exhibited lowered levels of
cortisol, the hormone produced by the adrenal gland to help us
deal with stressful situations, such as getting chased by a
water buffalo -- or watching a stock holding get crushed after
an unfavorable earnings report. (Cortisol is also associated
with increased belly fat and diminished cognitive performance;
in other words, it makes us fat and stupid.)

Perhaps most surprising: Levels of telomerase, an enzyme
that protects genetic material during cell division and delays
cell death, were higher in the retreat group. By boosting
telomerase, meditation could possibly extend life.

Skeptics, including some who’ve logged countless hours of
silent sitting, say that the promise of meditation sometimes
exceeds what’s practical. Tony Schwartz, author of “Be
Excellent at Anything: The Four Keys to Transforming the Way We
Work and Live,” says he’s meditated for hundreds of hours,
starting 25 years ago.

Lotus Position

“But the more time I spent meditating, the less value I
derived from it,” he wrote in a January column in the New York
Times. Nor has he seen evidence that the practice makes people
happier or leads to better behavior. “Don’t expect more than it
can deliver,” he wrote.

Meditation’s arrival on Wall Street closes a circle of
sorts. Whereas Siddhartha Gautama took to the lotus position out
of frustration with his riches, traders are hitting the mat to
obtain them. Dalio, for example, runs the largest hedge-fund
firm in the world and is worth $14 billion, according to the
Bloomberg Billionaires Index. He’s also the most vocal proponent
of meditation in finance and claims the practice has been the
single biggest factor in his success.

Dalio, 64, discovered Transcendental Meditation through the
Beatles. He’s been at it for 42 years, sitting for 20 minutes,
twice on most days, he says. He’s so convinced of its benefits
that he pays half the cost of Transcendental Meditation
instruction for the employees at his Westport, Connecticut–based
Bridgewater Associates LP.

‘Like a Ninja’

A competitive edge, not enlightenment, seems to be driving
Dalio. “I feel like a ninja in a fight,” Dalio said of his
professional equanimity, during a February panel discussion in
New York on the benefits of meditation. “When it comes at you,
it seems like slow motion.”

Tudor Jones is another hedge-fund billionaire on a quest
for inner peace and profit. A PBS documentary from 1987 shows
him trading in the most agitated, un-Buddhalike manner
imaginable. Twenty-five years later, he and his wife, Sonia, an
Ashtanga yoga enthusiast, gave $12 million to create the
Contemplative Sciences Center at the University of Virginia in
Charlottesville, Jones’s alma mater.

David Mick teaches an undergraduate business school course
there called “Cultivating Wisdom and Well-Being for Personal
and Professional Growth.” He recommends meditation and takes
each semester’s students on a field trip to Yogaville, a nearby
ashram. “You can’t be a wiser person if you can’t discipline
your mind,” says Mick, who meditates every morning.

‘Powerful Drug’

Willoughby Britton, a neuroscientist at Brown University,
warns that neophytes should proceed with caution. Spending hours
contemplating impermanence can foster anxiety and sadness. She
has seen people experience psychotic episodes on meditation
retreats, convincing themselves, for example, that the teacher
is evil and must be killed. “This is a powerful drug; it’s not
a hot bath,” Britton says, adding that the risks are worth the
rewards.

Unlike some other Western practitioners, Joan Halifax, a
roshi, or revered teacher, at the Upaya Zen Center in Santa Fe,
New Mexico, says she’s concerned the lords of finance are using
meditation for unjust ends, ignoring the moral principles
embodied in Buddhism.

“You can train people with meditation to be
sharpshooters,” she says. “Are they trying to get smarter so
they can exploit more people? Or are they interested in creating
a more just financial system?”

Dalio, for one, has agreed to give most of his fortune to
charity under the Giving Pledge program started by Warren
Buffett and Bill Gates, a move that would probably have
impressed the Buddha himself, who lived by daana, or a spirit of
generosity.

Before you give that fortune away, though, you have to earn
it. Some of the brightest minds in finance are betting that
meditation will help them do just that.